Floridians may have overpaid for medical treatment

State insurance regulators are looking into whether some Florida health plans have been using a flawed fee schedule to pay out-of-network doctors for their members' treatments.

The Associated Press

TALLAHASSEE, Fla. (AP) — State insurance regulators are looking into whether some Florida health plans have been using a flawed fee schedule to pay out-of-network doctors for their members' treatments. If so, patients have been shouldering more than their fair share of the bill for more than a decade.

Florida Insurance Commissioner Kevin McCarty confirmed the investigation in a letter Thursday to Consumer Advocate Sean Shaw, who had requested it. The letter was obtained by Health News Florida, an independent news service that has been reporting on the alleged overcharges.

McCarty's letter doesn't make clear when Florida's inquiry started, but New York's attorney general announced findings on overcharges in that state in January. The Senate Commerce Committee held hearings in the spring and released a report in June that said millions of Americans could have been overcharged billions of dollars.

The overcharges, which date back to 1994, occurred in plans that used a payment schedule produced by Ingenix Inc., which until recently was a subsidiary of UnitedHealth Group. New York's probe found that 10 major insurers — including United, WellPoint, Aetna, Cigna, and Humana — used the product dating back to 1994.

Blue Cross and Blue Shield of Florida was also a customer of Ingenix, according to the Senate report, "Underpayments to Consumers by the Health Insurance Industry." But the Florida insurer told Health News Florida that it used the product only in figuring dental claims.

Ingenix, based in Eden Prairie, Minn., says the company did nothing wrong. "We absolutely stand behind the integrity of our databases, the methodology used and the people who worked on them," said Karin Olson, corporate communications director.

In any event, the health plans developed their own fee schedules from the database products they bought from Ingenix, Olson said. She didn't know which companies had used them in Florida.

The health plans using the Ingenix schedule enroll employees in both the public and private sectors. Those affected, according to the Senate report, include members of the military and their dependents and employees of self-funded plans at major national companies that use the insurers as administrators. Patients affected by the overcharges are believed to include many federal employees.

The problem arose in managed-care plans such as preferred provider organizations (PPOs) or point-of-service plans (POS's) that allow patients to go outside the network if they're willing to pay extra. Here's why:

When a member of a health plan goes to a doctor (or other treatment provider) in that plan's network, there's no question about how much to bill because the plan and the doctor have a contract. But when doctors aren't in a plan's network, they charge their usual rates.

The health plan has told the member that it will pay a certain percentage for out-of-network care — but there's a catch. It will figure the payment based on the "usual and customary charges" for that region.

Where does the plan get the numbers to determine the "usual and customary charges?" The major supplier of the data is Ingenix.

The Senate report says Ingenix fudged the numbers, throwing out the highest charges. So the charges came out lower than they should have.

So: If the plan said it would pay 70 percent of the usual charge and determined that the usual charge was $100, the patient would pay $30. But if the usual charge was really $120, the patient would pay $50.

In his letter, McCarty said the Office of Insurance Regulation "is aware of this issue in the health care market" and has been "looking into the matter."

Shaw's letter to McCarty earlier this week said: "If an investigation reveals that Ingenix has been used by insurers in Florida, I encourage you to not only recommend solutions for halting this practice but also to work toward securing restitution for Florida consumers who were underpaid by their health insurers."

New York Attorney General Andrew Cuomo said in January that patients in his state had been overcharged anywhere from 2 to 28 percent. Under pressure from Cuomo, UnitedHealth agreed to pay $50 million to set up Ingenix as an independent nonprofit based in New York.

Separately, the company agreed to pay $350 million to settle class-action lawsuits from health plan members and out-of-network providers who said they were harmed by the underpayments. The agreement contained no admission of wrongdoing.